2026 (2) TMI 268 - HC - Income Tax

Validity of assessment under Section 153A r/w Section 144 challenged due to alleged nonservice of notice; assessment quashed and remitted.

Validity of an assessment under Section 153A read with Section 144 turned on absence of proof of service of a notice under Section 142(1); the respondents ... Validity of assessment order passed u/s 153A r/w Section 144 -. Seizure of amount from the vehicle of petitioner - petitioner vehemently argues that no notice u/s 142 (1) was ever served upon petitioner before passing of assessment order - notice was never received and in an absolutely illegal and arbitrary manner on the very next day i.e., on 30.09.2021, ex parte order under Section 153 A read with Section 144 of Act 1961 was passed - non adherence to letter of the law and principles of natural justice, HELD THAT:- Respondents was unable to point out anything on record which would indicate that notice dated 29.09.2021, under Section 142(1) of Act 1961, had ever been served upon the petitioner. Admittedly, assessment order was passed on the very next day i.e., 30.09.2021. Despite opportunity and pointed question, respondents was unable to bring on record anything to substantiate that this notice was ever served upon petitioner or that assessment order was also ever served upon petitioner. It is opposed to all probability and commonsense that once petitioner had produced the relevant ‘J’ Form before the Committee, he did/would not produce this form before the Income Tax Authorities, if called upon and given an opportunity. It is to be reiterated that the Committee had duly accepted the said ‘J’ form. Assessment order u/s 153A r/w Section 144 of Act 1961 is unsustainable, hence set aside. Matter is remanded to the Assessing Authority to consider the same afresh and decide the same in accordance with law. Issues: Whether the assessment order dated 30.09.2021 passed under Section 153A read with Section 144 of the Income-tax Act, 1961 is sustainable where notice under Section 142(1) was not served and no opportunity of hearing was afforded to the petitioner.Analysis: The Court examined the factual record regarding seizure of cash, the District Level Grievance Redressal Committee's order accepting the petitioner's 'J' Form and finding the transaction genuine, and the sequence of notices and orders issued by the Income Tax authorities. The Court noted absence of any record showing service of notice dated 29.09.2021 under Section 142(1) on the petitioner and observed that the assessment order was passed ex parte on 30.09.2021 without evidence of service or of affording the petitioner an opportunity to be heard. The legal framework considered includes the requirements of service of notice and the principles of natural justice applicable to assessments under Section 153A read with Section 144 of the Income-tax Act, 1961.Conclusion: The assessment order dated 30.09.2021 under Section 153A read with Section 144 of the Income-tax Act, 1961 is unsustainable for want of service of notice and denial of opportunity to the petitioner; the order is set aside and the matter is remanded to the Assessing Authority to decide afresh after affording the petitioner a hearing.